The Japanese yen retreated in Asian trading on Thursday against a basket of major and minor currencies, extending its losses for the second consecutive day against the US dollar, moving away from a two-week high amid ongoing correction and profit-taking activity, in addition to pressure from the stronger US currency ahead of the release of key US inflation data for November.

Later today, the final monetary policy meeting of the Bank of Japan for 2025 will begin, with decisions set to be announced on Friday. Markets widely expect a 25 basis point hike in Japanese interest rates, marking the second tightening move this year.

Price Overview

• Japanese yen exchange rate today: the dollar rose against the yen by 0.1% to ¥155.81, from an opening level of ¥155.64, recording a low of ¥155.42.

• The yen ended Wednesday’s session down 0.6% against the dollar, marking its first loss in three days, due to correction and profit-taking from a two-week high at ¥154.39.

US Dollar

The US dollar index rose by 0.1% on Thursday, maintaining its gains for the second consecutive session, reflecting the continued recovery of the US currency against a basket of global currencies.

This positive performance comes ahead of central bank decisions in Europe and Britain, where European interest rates are expected to remain unchanged, while UK interest rates are expected to be cut by about 25 basis points.

Later today, key US inflation data for November will be released, which are expected to provide strong clues about the path of Federal Reserve interest rates in 2026.

The dollar also welcomed remarks by US President Donald Trump, who said that the next Federal Reserve chair would believe in cutting interest rates “significantly.”

Bank of Japan

Later today, the Bank of Japan begins its policy meeting to discuss appropriate monetary policy for developments in the world’s fourth-largest economy, amid strong expectations of a 25 basis point rate hike to a range of 0.75%, the highest level since 2008 during the global financial crisis.

Markets are closely watching what Governor Kazuo Ueda will say about the direction of monetary policy in 2026, at a time when expectations are rising that the Japanese government may resort to further expansionary fiscal measures, adding complexity to the Bank of Japan’s policy outlook.

Japanese Interest Rates

• Following recent inflation and wage data in Japan, market pricing for the probability of a quarter-percentage-point rate hike at this week’s meeting has stabilized above 90%.

• Bank of Japan Governor Kazuo Ueda recently offered more optimistic expectations for the Japanese economy, saying the central bank would assess the pros and cons of raising interest rates at its upcoming policy meeting.

• Three government officials told Reuters that the Bank of Japan is likely to raise interest rates in December.

Views and Analysis

Analysts at Société Générale said they expect the Bank of Japan to raise interest rates to 1% by July next year, while also expecting the bank to deliver a rate hike when it announces its policy decision on Friday.

Thierry Wizman, global head of foreign exchange and interest rate strategy at Macquarie, said the Bank of Japan’s move comes in response to inflationary pressures linked to a weak yen, as well as a new political willingness to address what he described as a “cost-of-living crisis” in Japan.

Wizman added that they are more optimistic on the Japanese yen than on other currencies, and expect the dollar/yen pair to move toward 146 by the end of 2026.

Silver recently recorded a new all-time high at $64 per ounce. While gold has continued to outperform the white metal as a store of value, Deutsche Welle examines why silver is once again gaining growing global importance.

What happened to silver prices in 2025?

Silver has experienced a powerful rally, with prices more than doubling from around $30 per ounce (€24.54) at the start of the year to a record high of $64.65 per ounce on December 12.

The metal was trading near $30 on COMEX, the commodities arm of the New York Mercantile Exchange (NYMEX), in January. It then moved within a $37–$40 range throughout the summer before decisively breaking higher in September.

The pace of gains accelerated thereafter, with the strongest advances recorded during the final three months of the year.

The roughly 110% rise since the start of the year marks a dramatic turnaround for silver, long viewed as gold’s “poor cousin,” as gold typically outperforms during bullish markets.

Despite warnings from some investors about the potential for a short-term price correction, sentiment toward silver remains broadly positive heading into next year.

Prior to 2025, silver spent most of the past decade trading between $15 and $25 per ounce, with occasional spikes above $30 during periods of speculative enthusiasm, but it failed to sustain lasting upside momentum.

Even at its previous peaks in 1980 and 2011, silver reached around $49 per ounce, well below gold’s rallies above $1,900 per ounce.

This year, however, gold has lagged silver in relative terms, rising by about 60% to roughly $4,340 per ounce, compared with silver’s more-than-doubling.

Silver’s break to record levels has been partly driven by a weaker US dollar and expectations of interest rate cuts by the Federal Reserve, which tend to enhance the appeal of precious metals as safe-haven assets.

More significant drivers, however, have played a decisive role, most notably tightening global supply as production struggles to keep pace with demand.

What challenges does silver production face?

Latin America, which accounts for more than half of global silver output, is facing declining production as mines age and reserves are depleted.

Mexico, responsible for around 25% of global supply, has recorded double-digit production declines in recent years.

One of the country’s largest mines, San Julian in northern Chihuahua state, is approaching the end of its operational life by 2027. The mine is a key asset for Fresnillo, but ore quality is deteriorating and reserves are being exhausted.

At the same time, Peru, Bolivia, and Chile, which together provide roughly one-third of global silver supply, are experiencing falling ore grades, making extraction more costly and less efficient.

These countries are also grappling with political instability and stricter mining regulations, which have discouraged fresh investment in the sector.

According to analysts at London-based GlobalData, silver production in Latin America is expected to stagnate or begin declining by the end of the decade unless new deposits are discovered or supportive policies are introduced.

Meanwhile, the silver market has been in a structural deficit for a fifth consecutive year, according to the Silver Institute.

The institute estimates that global demand will exceed supply by around 95 million ounces this year.

Why is demand for silver increasing?

Demand for silver is rising not only because it is viewed as a store of value, but also because it has become a critical component in modern technology and clean energy.

Its unique properties, including the highest electrical and thermal conductivity of any metal, make it indispensable for fast-growing global industries.

Solar panels, for example, rely on silver paste to conduct electricity, and as governments push toward renewable energy targets, demand from the solar sector is expected to rise sharply.

Electric vehicles require up to two-thirds more silver than internal combustion engine vehicles, as the metal is used in batteries, wiring, and charging infrastructure, reinforcing silver’s role in the future of green transportation.

Silver is also playing an increasingly important role in the digital economy. Artificial intelligence chips and data centers rely on silver to ensure highly efficient electrical circuits, where speed and reliability are critical.

Silver’s ability to handle large electrical loads helps maintain signal integrity and stable performance at scale, while its high thermal conductivity aids in dissipating intense heat generated by AI workloads.

Despite declining use in coins and bullion, other traditional applications such as jewelry, electronics, medical devices, and consumer goods remain strong.

The Silver Institute expects global industrial demand for silver to continue growing steadily over the next five years.

Oxford Economics said this month that silver demand from the automotive sector will grow at an annual rate of 3.4% through 2031, and that the metal will benefit from a projected 65% increase in US data center construction over the same period.

What is silver’s historical role as money?

For thousands of years, silver has been trusted as a medium of exchange and a store of value. Ancient civilizations used it in trade due to its rarity, durability, and divisibility.

Silver’s importance expanded after European colonizers discovered vast deposits in Latin America, helping it become a metal of everyday transactions.

Spanish pieces of eight, silver coins worth eight reales, became the world’s first global trading currency, circulating from the Americas to Europe and Asia.

In the 19th century, many countries, including the United States and the United Kingdom, pegged their currencies to both gold and silver. The term “pound sterling” originally referred to a pound of silver.

Silver lost its monetary role in the 20th century as countries abandoned the silver standard. Central banks retained gold, while silver was increasingly directed toward industrial uses.

Nevertheless, silver has preserved its reputation as a hedge against inflation and financial turmoil, a legacy rooted in its long history as everyday money.

Palladium prices rose during Wednesday’s trading, supported by technical buying across several precious metals, most notably silver, which reached record highs, amid ongoing uncertainty surrounding US Federal Reserve policy.

Daily movements in palladium prices are influenced by the same factors that drive the broader precious metals complex, primarily US interest rate expectations, the strength of the dollar, and overall risk appetite among investors.

Reuters reported that investors remained cautious ahead of key US employment data, as well as upcoming inflation figures, prompting profit-taking across metals markets following a strong rally throughout 2025. In this context, palladium posted modest gains, while platinum remained relatively stable.

These developments are particularly significant given that palladium, like gold and silver, is globally priced. Expectations of lower interest rates or a weaker dollar tend to support non-yielding assets, while heightened sensitivity to economic data often leads to short-term risk reduction in metals markets.

Reuters also noted that delays and gaps in US economic data collection, caused by the government shutdown, have further complicated the macroeconomic outlook, adding an additional layer of uncertainty for traders positioning their portfolios.

European policy reassessment of internal combustion engines has emerged as a key medium-term demand driver for palladium.

On December 16, signals emerged that the European Commission may soften its stance on banning new internal combustion engine vehicles by 2035. According to Reuters, the Commission is preparing to revise the current plan by allowing the continued sale of certain non-fully electric vehicles, under pressure from major member states and the automotive industry.

Under proposals cited by the agency, the emissions reduction target could be adjusted from 100% to 90% by 2035 compared with 2021 levels, potentially extending the lifespan of plug-in hybrids and range-extender vehicles.

In a separate report, Reuters said the European Commission is also considering compensation mechanisms that would permit continued sales of combustion-engine vehicles beyond 2035 through the use of alternative fuels or green steel accounting.

This policy shift is highly relevant for palladium price expectations, given its close link to internal combustion engines, where it is used in catalytic converters to reduce harmful emissions in gasoline vehicles. Any extension in the lifecycle of combustion and hybrid vehicles in Europe could slow the erosion of palladium’s core demand base.

Reuters quoted a commodities strategist at WisdomTree as saying that such a policy shift would likely support internal combustion vehicles, which rely on palladium and platinum.

On the supply side, palladium market balance remains in focus, particularly following updated guidance from Russia’s Norilsk Nickel, the world’s largest palladium producer.

According to recent estimates, the company expects the palladium market to be broadly balanced in 2025 when excluding investment demand, but to show a deficit of around 200,000 ounces when investment demand is included. For 2026, Norilsk expects a deficit of approximately 100,000 ounces even without investment demand.

These distinctions are critical, as palladium is a relatively small and concentrated market, meaning shifts in investment flows or ETF demand can materially alter supply-demand dynamics and price sentiment.

In this context, a report from the Indian Bullion and Jewellers Association noted that palladium has risen by around 25% since the start of the latest rally, alongside strong gains in silver and platinum, illustrating how momentum has spread across the precious metals complex.

On pricing, market data showed NYMEX palladium futures for December 2025 trading near $1,592.8 per ounce, with notable intraday gains. Spot and futures prices can diverge depending on liquidity, short-term supply availability, and financing conditions.

Looking ahead, palladium’s strong performance in 2025 has prompted analysts to reassess their outlook for 2026, with the market caught between two competing narratives: structural support from constrained supply and policy developments that could extend demand for combustion engines, versus long-term headwinds from the expansion of fully electric vehicles and substitution risks.

Consensus projections point to a wide price range in 2026, with average estimates clustering around $1,250–$1,300 per ounce, reflecting elevated uncertainty following this year’s sharp rally.

During US trading hours, March-delivery palladium futures rose by 3.5% to $1,714.5 per ounce as of 16:52 GMT.

Bitcoin posted a modest gain on Wednesday, trading above the $88,000 level after limited losses earlier in the week. However, gains remained capped amid continued outflows from US-listed exchange-traded funds (ETFs), alongside ongoing uncertainty over the Federal Reserve’s interest rate path, keeping investors cautious.

The world’s largest cryptocurrency rose 1.3% to $88,497 by 09:53 ET (14:53 GMT).

Bitcoin continued to move within a narrow range, struggling to regain momentum as weak risk appetite and a lack of fresh catalysts weighed on prices, even as broader financial markets remained relatively stable.

Bitcoin steadies amid ETF outflows and Fed caution

Pressure on Bitcoin intensified as outflows from US spot Bitcoin ETFs persisted. Data showed that these funds recorded net redemptions over recent sessions, extending a withdrawal trend that has raised concerns about waning institutional demand.

ETF outflows have removed one of the key sources of support that previously helped fuel Bitcoin’s rally earlier this year.

Cryptocurrency markets also took cues from US economic data, as investors reassessed monetary policy expectations following mixed signals from the labor market.

The latest US jobs data pointed to slower employment growth alongside a gradual rise in the unemployment rate, suggesting the labor market may be entering a cooling phase. However, the slowdown has not been pronounced enough to give the Federal Reserve a clear signal to accelerate interest rate cuts.

These developments have complicated expectations for the Fed’s next moves, as policymakers continue to balance signs of softening labor conditions against inflation that remains above target.

As a result, uncertainty has increased across markets regarding the timing and pace of any future rate cuts, a factor that has weighed on risk-sensitive assets, including cryptocurrencies.

Attention is now turning to US inflation data due for release on Thursday.

Cryptocurrency prices today: Limited moves among altcoins

Most major altcoins showed limited movement on Wednesday, reflecting the cautious market backdrop. Media reports also pointed to weak liquidity behind the subdued price action.

Ethereum, the world’s second-largest cryptocurrency, fell 1.2% to $2,957.16.

Meanwhile, XRP, the third-largest cryptocurrency globally, rose 1% to $1.94.